Glossary
94 terms, defined precisely and without promotion. Where a term is contested or carries more than one meaning, the entry says so rather than picking the convenient one.
Real-world assets
18 termsERC-1400
A family of security token interfaces introducing partitions, transfer restrictions and documented transfer reasons; it remains a de facto standard rather than a finalised ERC.
ERC-3643
A permissioned token standard for regulated assets in which every transfer is checked against an on-chain identity and rule set before it can execute.
Fractional Ownership
Dividing an asset into small transferable units so that investors hold a fraction of the economic exposure; the legal form is usually a co-ownership, fund or note structure, not a divided title.
Fund Administrator
The service provider that keeps the unit register, calculates NAV, processes subscriptions and redemptions and prepares fund reporting.
Net Asset Value (NAV)
The value of a fund assets less liabilities per unit, determined by the administrator under a valuation policy, which is distinct from the market price of a token representing that unit.
Real-World Assets (RWA)
Off-chain assets such as government bonds, private credit, real estate or commodities represented on a blockchain, usually through a fund or SPV wrapper rather than direct title.
Security Token
A token that qualifies as a transferable security or other financial instrument, which places it under securities law and outside MiCA.
Special Purpose Vehicle (SPV)
A legal entity created to hold a defined asset pool and issue claims against it, isolating that pool from the originator balance sheet.
Subscription and Redemption
The primary-market processes by which fund units are created against payment and cancelled against proceeds, usually bound to dealing days and cut-off times even when the token trades continuously.
Tokenization
Recording ownership of, or a claim to, an asset as a transferable entry on a distributed ledger, so that transfer of the entry is intended to transfer the underlying right.
Tokenized Fund Shares
Units in a regulated fund whose register is kept on a distributed ledger, typically with transfer restrictions enforced at token level.
Tokenized Money Market Fund
A regulated money market fund whose units are issued and transferred on a distributed ledger, keeping fund rules on portfolio composition and liquidity intact.
Tokenized Private Credit
Loans or receivables originated off-chain and refinanced through tokens issued by an SPV, where investors take borrower credit risk plus originator and servicer risk.
Tokenized Real Estate
Tokens representing an interest in property, almost always via shares or notes of a property-holding company rather than title in the land register.
Tokenized Treasuries
Tokens representing units in a fund or note portfolio holding short-dated government debt, used mainly as on-chain cash management by crypto-native treasuries.
Transfer Agent
The party responsible for maintaining the register of holders and executing transfers; in tokenized structures this role is regulated separately in several jurisdictions.
Treasury Bill (T-Bill)
A US government obligation maturing in one year or less, sold at a discount to face value rather than paying a coupon. Its short duration is why almost every tokenized treasury product holds bills: a stable one-dollar share price requires paper whose price barely moves.
Whitelisting
Restricting a token so that only addresses linked to verified, eligible holders can receive or hold it, enforcing off-chain onboarding decisions at protocol level.
Stablecoins
10 termsAlgorithmic Stablecoin
A stablecoin relying on supply adjustment or a paired volatile token instead of full asset backing; the design has repeatedly failed under stress and is restricted in some regimes.
Crypto-Collateralised Stablecoin
A stablecoin minted against overcollateralised crypto positions and kept near its target by liquidation and arbitrage rather than by an issuer redemption promise.
Depeg
A sustained deviation of a stablecoin market price from its reference value, caused by reserve doubts, redemption friction, collateral stress or thin secondary liquidity.
Fiat-Backed Stablecoin
A stablecoin whose issuer holds a reserve of cash and short-dated instruments against outstanding tokens and undertakes to redeem them, typically at par.
Proof of Reserves
A cryptographic or attested demonstration that an operator controls assets covering customer balances; without an equally verified liability side it does not evidence solvency.
Redemption at Par
The holder right to exchange a token for its reference value with the issuer at any time and without deduction; under MiCA this is a defining feature of e-money tokens.
Reserve Attestation
A report by an accounting firm on the composition of a stablecoin reserve at a point in time, performed under attestation rather than audit standards.
Stablecoin
A token designed to hold a stable value against a reference such as a single currency, backed by reserves, collateral or an algorithm; the term covers legally very different instruments.
Tokenized Deposit
A commercial bank deposit recorded on a distributed ledger, retaining its status as a deposit including deposit guarantee coverage, usually with restricted transferability.
Yield-Bearing Stablecoin
A token holding a stable reference value while passing through investment income; under MiCA, e-money and asset-referenced token issuers may not grant interest, so such products are usually funds or notes rather than stablecoins in the regulatory sense.
DeFi
18 termsAutomated Market Maker (AMM)
A smart contract that quotes prices from a mathematical curve over its own reserves, executing trades against a pool instead of matching orders.
Centralised Finance (CeFi)
Crypto-asset services offered through a company that holds customer balances — an exchange, broker or lender. Operationally it is the traditional model applied to crypto: an account, an onboarding check, a custodian and an order book, usually with the counterparty risk of a bank and none of its deposit protection.
Collateral
An asset pledged to secure an obligation. On-chain the pledge is held by a smart contract rather than by a counterparty, which removes rehypothecation risk and replaces it with contract, oracle and liquidation risk — and, unlike a bank deposit, a tokenized fund posted as collateral keeps earning its own yield.
Decentralised Autonomous Organisation (DAO)
A group coordinating through on-chain voting and a shared treasury; without a legal wrapper participants may be treated as partners with unlimited liability in several jurisdictions.
Decentralised Finance (DeFi)
Financial services provided by smart contracts rather than intermediaries, typically lending, exchange and derivatives, with no authorised operator and no client relationship.
ERC-4626
A standard interface for tokenized vaults, expressing deposits as shares in an underlying asset pool and standardising conversion between shares and assets.
Flash Loan
An uncollateralised loan that must be borrowed and repaid within a single transaction, otherwise the whole transaction reverts; widely used in arbitrage and in economic exploits.
Governance Token
A token conferring voting weight over protocol parameters; it usually carries no legal claim on assets, cash flows or the issuing entity.
Impermanent Loss
The shortfall of a liquidity position against simply holding the same assets, caused by the pool rebalancing against price moves; the more precise measure is loss-versus-rebalancing.
Lending Protocol
A contract-based pool where depositors supply assets and borrowers draw against overcollateralised positions at algorithmically set variable rates.
Liquid Staking Token
A transferable claim on staked tokens plus accrued rewards, which can trade below the value of the underlying when exit queues lengthen.
Liquidation
Automatic sale of a borrower collateral once an oracle-reported ratio breaches a threshold, executed by third parties who receive a bonus from that collateral.
Liquidity Pool
A contract-held reserve of two or more assets against which trades execute, funded by liquidity providers who receive fees and bear the pool exposure.
Loan-to-Value and Health Factor
Ratios expressing borrowing against collateral value and the distance to the liquidation threshold, recomputed continuously from oracle prices.
Maximal Extractable Value (MEV)
Value captured by reordering, inserting or censoring transactions within a block, borne mainly by ordinary traders as worse execution.
Overcollateralisation
Requiring collateral worth substantially more than the exposure, which substitutes for credit assessment where the borrower is pseudonymous.
Staking
Bonding tokens to secure a proof-of-stake network in return for protocol issuance and transaction fees, exposed to slashing, validator failure and unbonding periods.
Total Value Locked (TVL)
The market value of assets held in a protocol contracts; it is a size indicator, not a measure of depth, revenue or solvency, and double-counts assets across composed protocols.
Infrastructure
17 termsAtomic Settlement
Settlement in which all legs of a transaction succeed or fail together within one transaction, eliminating the settlement window but also eliminating netting.
Bridge and Wrapped Assets
Mechanisms that lock an asset on one chain and issue a representation on another; the representation is a claim on the bridge, not the original asset.
Central Bank Digital Currency (CBDC)
A direct liability of a central bank issued in digital form, distinguished between retail versions for the public and wholesale versions for interbank settlement.
Cross-Chain Interoperability
Protocols for messaging and value transfer between ledgers; every design adds a trust assumption, since ledgers cannot verify each other natively.
Custodial and Non-Custodial Wallets
The distinction between a provider holding the keys on the client behalf and the client holding them directly, which determines both the regulatory treatment and who bears loss.
Delivery versus Payment (DvP)
A settlement mechanism in which the asset transfer occurs if and only if the payment occurs, removing principal risk between the two legs.
ERC-20
The baseline fungible token interface on Ethereum-compatible chains, with no built-in transfer restrictions, identity checks or recovery mechanism.
Layer 2 and Rollups
Networks that execute transactions off the base chain and post compressed data or proofs back to it, inheriting security from the base layer subject to bridge and sequencer assumptions.
MPC Wallet
A wallet in which a signature is produced jointly from key shares held by several parties, so no single party ever holds a complete private key.
Multisignature (Multisig)
An on-chain rule requiring several of a defined set of keys to authorise a transaction, visible to anyone inspecting the contract.
Oracle
A service that brings off-chain data such as prices or NAV onto a ledger so contracts can act on it; it is a single point of failure and a common attack surface.
Permissioned Blockchain
A ledger on which participation, validation or asset holding is restricted to identified parties, in contrast to a public permissionless chain open to anyone.
Private Key
The secret value that authorises transfers from an address; its loss is generally irreversible and its compromise allows a valid, unrecoverable transfer.
Qualified Custodian
A regulated entity permitted to hold client assets, including crypto-asset keys; the applicable licence differs by jurisdiction and the US rule set has been in flux.
Settlement Finality
The point at which a transfer becomes legally irreversible, including against an insolvency administrator; block confirmations are a technical, not a legal, statement.
Smart Contract
Program code deployed on a ledger that executes deterministically when called; it is not a contract in the legal sense and does not by itself create obligations between parties.
Wholesale CBDC
Central bank money for interbank and securities settlement on a distributed ledger; in several European trials the cash leg stayed in the RTGS system and the chain only triggered payment.
Regulation
20 termsAsset-Referenced Token (ART)
A MiCA category for tokens referencing a basket of currencies, commodities or other assets; issuers require authorisation, must hold a segregated reserve and may not grant interest.
Basel Cryptoasset Standard
The Basel Committee prudential treatment of bank exposures to crypto-assets, splitting them into groups with sharply different capital charges and an exposure limit for the riskiest group; verify national implementation.
Crypto Custody Business (Germany)
The German licensable activity of safekeeping, administering or securing crypto-assets or private keys for others; verify current scope, since MiCA implementation shifted parts of it out of the KWG.
Crypto Securities Register
The register in which German crypto securities are recorded, maintained by a registrar whose activity is a licensed financial service under the KWG.
Crypto-Asset Service Provider (CASP)
A firm authorised under MiCA to provide services such as custody, exchange, order execution, placement or advice in crypto-assets, with passporting across the EU.
Digital Euro
The retail central bank digital currency project of the Eurosystem, subject to an EU legislative process that sets holding limits and distribution rules.
DLT Pilot Regime
Regulation (EU) 2022/858, applicable since March 2023, allowing DLT market infrastructures to operate under exemptions from MiFIR and CSDR within size caps; uptake has been limited.
E-Money Token (EMT)
A MiCA category for tokens referencing a single official currency; issuers must be a credit institution or electronic money institution, must redeem at par at any time and may not pay interest.
Electronic Security under the eWpG
A German-law security issued by entry in an electronic register instead of a certificate; the eWpG distinguishes central register securities from crypto securities kept on a distributed ledger.
Financial Instrument under MiFID II
The classification that decides whether securities law or MiCA applies to a token; national regulators have applied it inconsistently, so the assessment is instrument-specific.
Howey Test
The US test from SEC v. W. J. Howey Co. (1946) for an investment contract, applied to token offerings; its application to secondary trading of tokens remains contested.
Know Your Customer (KYC)
The regulated process of identifying and verifying a customer before a financial relationship begins, and of keeping that identification current — the gate that decides which wallet addresses a tokenized security may ever be transferred to.
Know Your Transaction (KYT)
Ongoing screening of on-chain transactions and address provenance against risk indicators; attribution is probabilistic and differs between vendors.
Ledger-Based Security (Swiss DLT Act)
A Swiss law instrument under the Code of Obligations in which rights are recorded in a distributed register and can only be transferred through it, effective since 2021.
MiCA
Regulation (EU) 2023/1114 on markets in crypto-assets, covering issuance of asset-referenced and e-money tokens and the authorisation of crypto-asset service providers; it expressly does not apply to crypto-assets that are financial instruments.
Payment Stablecoin
US regulatory term for a fiat-referenced token used for payments, brought under a federal framework by the GENIUS Act of 2025; implementing rules are still being built out.
Prospectus Obligation
The duty to publish an approved prospectus when offering transferable securities to the public or admitting them to a regulated market, subject to exemptions such as qualified investor placements.
Sanctions Screening
Checking counterparties and, on-chain, addresses against sanctions lists; listed addresses create the practical problem that received units may be unusable.
Travel Rule
The obligation to transmit originator and beneficiary information with a transfer; in the EU it applies to crypto-asset transfers under Regulation (EU) 2023/1113 without a de minimis threshold.
TVTG (Liechtenstein)
Liechtenstein legislation in force since 2020 that defines the token as a container for rights and regulates providers of trustworthy technology services; its interaction with MiCA should be verified for current scope.
Risk
11 termsAdmin Key and Upgradeability Risk
The exposure created when a party can upgrade, pause, freeze or reconfigure a contract, which makes an ostensibly autonomous system a counterparty exposure to that key holder.
Bankruptcy Remoteness
Structural features intended to keep an asset pool outside the insolvency of the originator or sponsor, achieved through legal structuring rather than through technology.
Bridge Risk
The risk concentrated in cross-chain mechanisms, where locked collateral can be drained and the wrapped representation loses its backing; historically among the largest loss categories.
Counterparty Risk On-Chain
Exposure to identifiable parties that persists despite disintermediation, including issuers, reserve custodians, bridge operators, oracle providers and admin key holders.
Freeze and Blacklist Function
An issuer or administrator capability to block transfers from specific addresses or to immobilise balances, present in most regulated tokens and in the largest stablecoins.
Key Loss and Custody Risk
The risk of permanent loss of access to assets through lost, destroyed or compromised keys, for which no legal recovery procedure comparable to a lost certificate exists.
Legal Enforceability of Tokenized Claims
Whether holding a token gives a claim a court will enforce against an identified obligor, which depends on the issuance documents and the governing law, not on the ledger.
Oracle Manipulation
Distorting the price a contract relies on, often using a thin market and borrowed capital, in order to trigger favourable liquidations or mint tokens improperly.
Redemption Gate and Liquidity Risk
Contractual or regulatory tools that suspend or limit redemptions in stress; tokenization does not remove them, and the secondary market price can fall below NAV while they apply.
Smart Contract Audit
A time-boxed review of contract code against known vulnerability classes and specified behaviour; it is not an assurance engagement on solvency, economics or governance.
Smart Contract Risk
The risk that deployed code behaves other than intended or is exploited, causing irreversible loss without any counterparty default.
Looking for how a traditional-finance term maps to its on-chain counterpart rather than a standalone definition? That is the Term Bridge, which also flags where the obvious analogy is wrong.